ASIA RISING

Twelve years ago, Charles Schwab & Co. quietly launched one
of its most ambitious ethnic marketing initiatives in an attempt to
attract business from Asian Americans. Spurred by 1990 census
figures showing the Asian community becoming wealthier and growing
at a faster pace than any other ethnic group in the U.S., the San
Francisco-based brokerage firm assigned three full-time employees
to reach out to the market.

A decade later, that step has proven prescient. Schwab now
employs more than 300 people who speak Chinese, Korean and
Vietnamese at call centers dedicated to Asian American customers
who want to communicate in their own languages. Those who are
Chinese can access a Chinese-language Web site for trading, and a
Chinese online news service delivers real-time information and
research about the U.S. financial markets. Asians also have access
to over 14 Schwab branches in predominantly Asian neighborhoods on
the East and West Coasts. And the company's name is plastered on
Asian TV channels, in newspapers and across billboards. The result:
Thanks to its early entry and its long-term focus, the discount
broker is now one of the leading financial services firms serving
Asians, laying claim to millions of their dollars. â€œTo really
be able to capture this market, you need a continuous, long-term
investment in building brand and awareness. It's not just an
investment from quarter to quarter,â€? says Christin Chan,
director of marketing for Schwab's Asia Pacific Services Division.
â€œUnderstanding how to make the [Asian] investor comfortable
is the most critical part of the whole process.â€?

Many other companies are taking note of such lessons to learn
how to gain a share of Asians' buying power, estimated at $253
billion annually, according to the Selig Center for International
Growth at the University of Georgia in Atlanta. Indeed, many big
businesses are waking up to the strength of the Asian market,
exploring the best ways to tap these consumers. Carmakers,
retailers, health-care providers, vacation resorts, drug companies
and others have begun rolling out campaigns to attract a
demographic known for brand loyalty and quality consciousness
â€” one that has the potential for significant growth in the
future.

Emboldened by their success in targeting other ethnic and racial
groups, businesses hope to use the experience gained from their
campaigns in the Latino and African American communities when
appealing to Asians. Some are hoping to enter this emerging market
while it's still early enough and cheap enough to capture a sizable
piece of the pie. And others have homed in on this long-ignored
demographic as they search for bright spots in a slow economy.
â€œWe're finally being invited to sit at the adults' table
now,â€? says Julia Huang, president of Torrance, Calif.-based
Asian marketing firm Intertrend Communications, noting that large
brands and major corporations have been calling and taking the
market seriously.

When it came to Asian Americans, not long ago even the
proverbial kids' table was considered unworthy of marketing
dollars. Skeptics insisted that the small size of the Asian
American population, its fragmented nature and the cost of reaching
it outweighed the investment required. However, financial services
firms such as Schwab, and long-distance providers like AT&T and
MCI, bet that demographic trends would make marketing to Asians pay
off over the long term. And that's precisely what has happened
during the past decade. The Asian population in the U.S. â€”
including those of mixed race â€” grew 72 percent over the
period, reaching almost 11.9 million in 2000. Asians now make up
4.2 percent of the total U.S. population and the group is expected
to continue growing at a healthy clip, thanks to continued
immigration, higher than average birthrates and intermarriage.

Asians have also become a far wealthier group. Fully one-third
of Asians earn $75,000 or more annually, many holding managerial or
key positions in technical sales. â€œWe call the Asian American
segment a segment of superlatives,â€? quips Wanla Cheng, a
principal of New York-based Asia Link Consulting Group. â€œFrom
the last wave of immigration, there are more Asians who have been
in this country longer, and their accumulated wealth has increased
over time.â€?

For businesses, such growth is hard to ignore. And as they've
grown comfortable with the dynamics, sensitivities and special
requirements of marketing to Hispanics and African Americans,
companies have been encouraged to go after the more complex Asian
market. (See sidebar, page 41.) â€œCorporations now are better
geared for the smaller niche marketing that it takes to reach
Asians,â€? says Larry Moskowitz, director of strategic
marketing services at Kang & Lee Advertising in New York.

Take American Honda Motor Co., which in 2001 launched a
multimillion- dollar plan to reach Asian car buyers, after making
successful appeals to Latino and African American consumers for
several years. The company took note of the Asian market several
years ago, says Barbara Ponce, manager of emerging markets for
Honda's advertising division, but waited to dedicate full-time
staff to the sales effort. Thanks to its experience in the Latino
market, she notes, Honda was able to move into the Asian
marketplace quickly and launch an ambitious campaign.

Most critical for Honda was to â€œearn the rightâ€? to
market to the ethnic group, Ponce says. The car company needed to
get out into the community, support events and institutions and
show its commitment to Asian culture in America before sending out
its sales message, says Ponce. Honda started by launching a
syndicated marketing study to suss out its position among Chinese
car buyers. It found that it was ranked third, after BMW and
Toyota. The automotive giant also caught on to some critical
aspects of the community during the survey process: an overwhelming
preference for in-language marketing, high consumption of print
media and high Internet usage (driven by computer penetration of
upward of 70 percent in Asian homes). Next, Ponce and her team
focused on community service efforts aimed at the Chinese
population, a choice based on the group's size, spending patterns
and propensity to buy new cars.

Only after Honda made a â€œconnectionâ€? with the group
did it roll out its campaign, an integrated marketing effort. The
team opted to use Chinese calligraphy â€” a potent cultural and
linguistic symbol â€” in its ads as a means of defining the
strength and precision handling of Honda vehicles. In TV spots,
Honda cars write out the character meaning â€œlife,â€?
appealing to yet another cultural value of hope and perseverance.
Ponce says that the carmaker will direct its marketing efforts at
the two segments it understands best â€” the Chinese and Korean
markets â€” for several years before it branches out to target
other Asian subgroups.

In much the same way, Ford carefully launched its Asian
marketing plan some three years ago, building on its experience
with Latinos. It has since been expanding its presence in Asian
media, advertising in key print and TV markets. â€œAt the end
of the day, it's just good business,â€? says Peter Christofer,
multicultural marketing manager at Ford. While he is mum about the
size of the marketing investment, Christofer underscores that it is
a notable but tiny share of the general marketing budget.
â€œThis is not about what [the competition] is going to do.
It's about our own interest in the market and the future of the
busines,â€? he says.

MARKETING OPPORTUNITIES

Automakers enamored of Asians' car purchasing habits exemplify
the new interest in the Asian market. Asian consumers are far more
likely to buy multiple cars than other ethnic groups and are more
likely to buy cars in either the $40,000 luxury range or in the
$20,000 family sedan category, says Michael Sherman, general
manager of San Francisco-based Asian televion broadcaster KTSF. In
research commissioned by the TV station, some 20 percent of its
audience reported that they intended to purchase a new car in the
next 12 months.

It only makes sense that the demographic willing to buy a new
car would also be interested in pricey vacations and activities. So
for almost five years, Boothcreek Resorts has been reaching out to
Asian Americans, especially in the Bay Area, a three-hour drive
from two of its ski resorts in Lake Tahoe, Nev. The company's
marketing team looked at the growth of the demographic and caught
on to a major opportunity, says Julie Maurer, vice president of
marketing and sales. â€œLooking down the line at our business,
it made sense to begin appealing to different Asian American
markets,â€? says Maurer. â€œI saw how quickly the
demographic was changing, and there were a lot of similarities
between Asians and the typical skier, in terms of education, family
and such.â€?

With the help of San Francisco-based DAE Advertising, Boothcreek
launched a series of seven Chinese advertorials promoting skiing,
all published in prominent Chinese media. The team set up photo
shoots at the resorts, using its Asian customers as models, and
went after young Asian professionals â€” also known as
â€œYappiesâ€? â€” with special deals for lift tickets
and more. Much effort was also focused on ski schools, where
teachers were trained to accommodate Asian culture. For example,
traditionally teachers tended to praise students a lot and make eye
contact often, but Boothcreek's instructors found Asians less
comfortable with the attention. The company also made a point of
having festivities on the Chinese New Year. Such efforts seem to
have paid off handsomely, according to Boothcreek's surveys of its
clients. When the company began its Asian marketing push, some 3
percent of its clients were Asian; today Asians account for 10
percent to 12 percent of its business. Maurer notes that part of
that growth is due to the general growth of the ethnic group, but a
notable portion of it has come from the firm's marketing
tactics.

Despite all the interest, however, analysts stress that the
Asian market will â€œarriveâ€? only when more corporate
giants start to court Asians. Marketers note that while several
major players have been making inquiries in recent months, and
select brands have done tests, support from the big corporations is
still lacking. That was clear at a recent meeting of the Asian
American Advertising Foundation to discuss the future of Asian
marketing, where most blue-chip companies were noticeably absent.
â€œTraditionally, corporate America has not done much [Asian
marketing],â€? says Wei Tai Kwok, a principal at DAE
Advertising. â€œI don't necessarily blame them. It's just an
aspect of America that we've been monocultural and
monolingual.â€? Nonetheless, an awareness of this market is
growing, Kwok says.

FINDING A VOICE

Awareness, however, is only the first step. The business of
reaching Asians is a complex balance of language, lexicon and
message. Asian core values â€” family, education and work ethic
â€” may be universal, but each subgroup is tied to its
particular cultural heritage and dialect.

Language is one of the most critical factors in tapping this
community. Some 80 percent of Asians are reachable in-language,
says Sarah White, account services manager at the Interviewing
Service of America, a multicultural research service based in Los
Angeles. In fact, even when Asians conduct their day-to-day affairs
in English, they are far more receptive to marketing communications
in their mother tongue, she notes. â€œThe biggest aspect of
this is cultural rapport,â€? says White. â€œThere is a way
of being, an openness that you can't achieve unless you speak their
language.â€?

That doesn't entail simply getting a good translator, either.
Advertising copy must be written specifically for that market,
taking into account the mores and taboos of each ethnic subgroup,
says Natalie Rouse, assistant marketing manager for AT&T
Broadband in the Bay area. Flippant or whimsical copy in English,
for one thing, can easily backfire and come off as immature in
Chinese. For another, banks seeking to convince clients to trust
them with their money must prove that they are worthy of it by
showing the right amount of respect. Even when the copy is in
English, as when reaching out to the South Asian community, the
style of writing is important, Rouse adds. â€œThey tend to use
the Queen's English rather than American English,â€? she
says.

Representations of Asians in advertisements are also critical.
Many firms reaching out to the group have grasped the need for
separate ads for Chinese and Koreans, for example, with models
reflecting the face of each segment. â€œThe most common mistake
many advertisers make is to put the same photos in all their Asian
creative,â€? says Dmitri Maglalang, marketing associate at
Bloomington, Ill.-based State Farm Insurance. â€œBut now we're
making sure we use Korean models for Korean creative and Chinese
models for our Chinese marketing.â€? Even the colors used can
influence whether a message is acceptable. Whereas in the general
market white could represent cleanliness or simplicity, it
signifies mourning to the Chinese, Rouse says. A postcard or a
direct mailer with a bright yellow background could have negative
connotations in some Asian cultures.

Even the timing of campaigns may need to be measured
differently, according to Rouse. For instance, she notes that in
many of her direct response campaigns targeting Asian Americans,
responses can vary by subgroup. Chinese Americans usually take far
longer to respond, while South Asians are far more spontaneous and
respond more quickly. In some cases, responses continue pouring in
for up to six months. â€œThis just means that each cultural
group responds differently, and you must take that into
account,â€? Rouse emphasizes.

Most daunting for advertisers new to the market is the lack of
standardized research on Asian Americans. While in-language polls
and research â€” by organizations such as the Interviewing
Service of America and various marketing firms â€” provide
glimpses of the group, marketers argue that research tells only
part of the story. For example, the heart of any campaign must be
community involvement, marketers stress â€” a difficult metric
to measure. In Schwab's case, although the firm launched print, TV
and Internet advertisements, the core of its marketing efforts has
been educational outreach to teach clients how to invest prudently.
Asian investors tend to be short-term investors who trade
frequently, says Schwab's Chan. So Schwab has focused on teaching
them the importance of diversification and long-term planning. That
can require some handholding, Chan admits, but it's work that has
earned Schwab a loyal customer base. The brokerage firm even goes
as far as to open some of its Asian-neighborhood branches on
Saturdays to accommodate Asians' tendency to handle money matters
on weekends.

Despite all the challenges, however, reaching Asian Americans is
relatively inexpensive and, when it comes to geography, downright
simple. The concentration of Asians in gateway cities makes them
far easier to target through community events as well as
traditional and specialty media. And Asian media, unlike its
counterparts in the Latino and African American markets, is far
cheaper to buy. â€œThe fact is that Asian media is inexpensive,
but the people it reaches have a much higher consumer profile than
many other demographics,â€? says Moskowitz of Kang & Lee.
â€œWhere it gets expensive is in customer service and
distribution.â€?

While Latino media campaigns can cost millions, Asian marketing
campaigns typically run in the hundreds of thousands or less.
Boothcreek, for example, has spent about $30,000 per year on Asian
marketing. What's more, many Asian media outlets, especially those
reaching South Asian audiences, are stepping up efforts to work
together and deliver more integrated advertising campaigns.

â€œThe fact is, everyone can have a piece of the pie as long
as they meet the demands of the market,â€? says Moskowitz.
AT&T's Rouse agrees: â€œThis is where the growth is coming
from, and this is where the future lies. A lot of marketers are
realizing that if they don't get into the market now, it will be a
lot harder and more expensive to get into it later.â€?

DEMOGRAPHIC PROFILE

ASIAN AMERICAN
DIVERSITY

Cultural and language differences
among this growing population present formidable challenges to
marketers.

The term â€œAsianâ€? encompasses a broad swath of
cultures and traditions, many unrelated save for their roots in the
Far East, in Southeast Asia and on the Indian subcontinent. Not
surprisingly, then, knowing who you're talking to can be half the
battle in reaching this growing demographic.

Marketers are finding that today's Asian Americans are more
diverse, more suburban and better educated. By far the largest
segment of the Asian population is the Chinese American group,
which grew 48 percent, to 2.4 million, between 1990 and 2000,
according to Census 2000. Filipinos follow, growing 31 percent, to
almost 1.9 million, in the decade. Indians grew a whopping 105
percent, to 1.9 million. Vietnamese, too, experienced a growth
spurt, increasing 83 percent, to 1.2 million â€” almost the
same as the Korean segment, which has about 1.2 million.

Asians have been gradually moving out of cities and into the
suburbs. Almost half of Asians in the U.S. are concentrated in
three states â€” California, with 4.8 million, or 12 percent of
that state's population; New York, with 1.2 million, or 6.2 percent
of its population; and Hawaii, with 0.7 million, or 58 percent its
population.

Asians are also concentrated near colleges and universities,
reflecting their interest in higher education. For example, in
Ithaca, N.Y., home to Cornell University and Ithaca College, among
others, Asians account for 13.7 percent of the population, almost
triple their state average of 5.5 percent. In a report released
last year, the Census Bureau found that 44 percent of Asian
Americans ages 25 and over have a bachelor's degree or higher,
while 86 percent have at least a high school diploma. Meanwhile,
almost a third of the Asian population is under age 18, compared
with about a quarter of whites of the same age; only 7 percent of
Asians are over 65, half the number of whites in the same age
group.

Significant changes have also begun to occur among the
two-thirds of Asians who are immigrants. Skilled workers entering
the country on H-1B visas have added another dimension to this
already complex community. Most noteworthy has been the gradual
shift to Mandarin from Cantonese in Chinese communications. An
influx of skilled workers from Mandarin-speaking regions on the
mainland has reversed a longstanding language divide, marketers
say.

Census 2000 reflected this growing diversity by acknowledging
Asians of mixed race. The results show a clear picture of the
intermarrying occurring between Asians and non-Asians. Almost 1.7
million Asian Americans reported being of mixed race. Of the six
largest groups, Japanese Americans were most likely to report
descent from one or more races or Asian groups, with almost a third
of the 1.1 million Japanese reporting a combination of Japanese and
some other ancestry. Meanwhile, some 400,000 respondents said they
were Chinese mixed with another race or Asian group. Half a million
Filipinos said the same, and about 200,000 Indians reported mixed
heritage. The overwhelming majority of all intermarriages was with
whites, accounting for about 860,000 of those of mixed ancestry,
while about 100,000 reported they were of Asian and African
American heritage.

With those numbers in hand, many demographers have begun to
describe the rise of an Asian American identity divorced from
nationality and centered on life as minorities in America.
Madhulika S. Khandelwal, assistant professor in Asian American
studies at the University of Massachusetts in Boston, believes that
more Asian Americans see themselves as an integrated, inclusive
demographic than ever before. The rise of South Asians into the
Asian mainstream has helped reinforce such thinking, she says.
â€œYou can begin to see a transition or a process where
community leaders are not only immigrants for whom nationality is
important,â€? Khandelwal says. â€œThe whole framework now
is, â€˜What is my identity here in the U.S. compared with other
Americans?â€™ It's a process of different groups coming
together to create a new identity.â€?
â€” HF

REACHING GENERATION 2.0

For Honda, the secret to gaining the
attention of second-generation Asians lay in a popular
beverage.

For years, marketers have debated how best to reach
second-generation kids who are connected to their roots but tied
equally tied to mainstream American life. Some argue that
mainstream media efforts are enough, while others insist that
targeted marketing is more effective. Honda Motor Co. chose to
piggyback on Boba, a beverage developed in Taiwan that is all the
rage in Asian youth circles.

The beverage, also known as bubble tea, consists of
â€œpearlsâ€? of black, gummy, tapioca balls that float in a
mixture of sweetened iced tea. It has quickly caught on as the soft
drink of Asian youth. Honda's idea was to develop drink sleeves,
much like the sleeves that surround hot beverages in the U.S., to
promote its youth-oriented cars, like the Civic and Acura RSX, says
Barbara Ponce, manager of emerging markets for Honda's advertising
division. Ponce got the idea from one of her young Asian co-workers
who frequents Boba stores and noticed the number of young Asians
who pulled up in Hondas. The Civic has long been a favorite of
young adults seeking to soup up their cars with sexy wheels and
sports accessories, and Ponce and her team sought to build on that
popularity to push the Honda brand to more 18- to 25-year-olds.

In January 2002, Honda negotiated a deal with Boba ingredients
distributor Bright Vision to distribute the sleeves, which direct
tea drinkers to Web sites that offer further information about
Honda and ideas on souping up cars. The company also sponsored
events centered on Boba at various Asian cultural festivals.
â€œIn order to compete, you need to be at the spots where
[young] Asians work and play,â€? Ponce notes. â€œCoffee
sleeves have done quite a bit in the past, but what's unique here
is the application to reach a market that's particularly hard to
reach.â€? It's too soon to know the results of this marketing
push, Ponce says, though execs are pleased with the buzz. In fact,
other carmakers are said to be trying to get into the same game,
hoping to get sleeves with their marketing messages into the hands
of other Boba distributors.
â€” HF